MBNA hoping to crack Egg deal

US credit card firm MBNA was today reported to be lining up a £900m (€1.3bn) bid for online bank Egg.

MBNA is understood to have already hired advisers and is expected to make a formal approach shortly to Prudential, the insurer that owns 79% of Egg.

According to The Observer, new Pru chief executive Mark Tucker is keen to sell the stake in Egg as soon as possible as it does not fit with the insurer’s core operations.

Prudential tried to sell Egg via an auction last year but potenial buyers balked at an asking price thought to be in the region of £1.6bn (€2.4bn).

MBNA, which has its UK base in Chester, was believed to have vied with financial groups including the Royal Bank of Scotland for Egg at that time.

Reviving its interest makes sense for MBNA as the main operation of Egg is centred around credit cards, the report said.

Egg, which employs around 2,000 people in the UK in Derby, Dudley and London, made operating profits of £10m (€14.8m) in the first three months of 2005.

Its core UK credit card business grew balances by more than £200m (€296.4m), while group profits totalled £5m (€7.4m) in the first quarter.

Selling its remaining stake in Egg would allow the Prudential to improve relations further with investors who were angered by last year’s controversial £1bn (€1.5bn) rights issue.

A deal would also mark a major success for Mr Tucker as the failure to sell Egg was seen as a big embarrassment for his predecessor, Jonathan Bloomer, who was ousted earlier this year.

Analysts have picked up hints from the Pru that proceeds from any sale could be returned to shareholders.

MBNA issues its own credit cards as well as affinity cards for other financial services groups, charities and sports clubs such as Manchester United.

The group has more than £9.5bn (€14.1bn) outstanding on credit cards in Europe.